ECS 1601

Study Unit 5 Quiz

Multiple Choice Questions (MCQs)

1.

In 2009, Ozzie purchased a 1999 Opel Corsa Lite from his neighbour for his son, he purchased
a 1999 Camry from Larchmont Toyota for his wife, and he bought a 2009 new Ford for himself,
he also sold his 1993 Dodge Caravan. Which, if any, of these transactions will be included in
GDP in 2009?

2.

[1]

Only the purchase of the Ford

[2]

the purchase of the Ford and the Caravan

[3]

all four transactions

[4]

all three purchases but not the sale

Study the following table and answer the question that follows.
2006

2009

Product

Price

Quantity

Price

Quantity

Camera

10

100

12

120

Legal Services

15

50

20

45

Books

40

200

45

210

Suppose that a very simple economy produces three goods: cameras, legal services, and books. The
quantities produced and their corresponding prices for 2006 and 2009 are shown in the table above.
What is real GDP in 2006, using 2009 as the base year?

3.

4.

[1]

R28 885

[2]

R11 790

[3]

R10 275

[4]

R11 200

Which of the following is NOT a final good?

[1]

a purse sold to a foreign visitor

[2]

a new computer sold to a UNISA student

[3]

a hot dog sold to a spectator at a Chicago Bears football game

[4]

a new car sold to Avis for use in their fleet of rental cars

In years with inflation, nominal GDP increases ________ real GDP

[1]

at the same rate as

[2]

faster than

[3]

slower than

[4]

sometimes faster, sometimes slower, and sometimes at the same rate as

Quiz will be discussed on your e-tutor site from Monday 10 March

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ECS 1601
Study Unit 5 Quiz

True and False

5.

Indicate whether the following statements are true/false and explain why.
5.1

Subsidies on products will in a difference between the price paid for a good and the cost
of production and income earned by the factors of production

5.2

Double counting can be avoided by only counting the value of those sales where a good
or service reaches its final destination

5.3

The production, income and expenditure methods for measuring GDP will have
different results as they calculate GDP differently

5.4

The difference between real and nominal GDP is that certain factors of production are
excluded in the calculation of nominal GDP

Long Questions
6.

Calculate the GDP for a hypothetical economy that produces two goods (computers and
gasoline). The prices and quantities produced in each year are provided in the following table:
2006

2007

2008

Prices
Computers
Petrol
Computers
Petrol

R2 000
R50 per liter

R1 900
R100 per liter
Quantities
10
16
100 liters
120 liters

R1 200
R400 per liter
40
110 liters

6.1

Compute the nominal GDP for each of the three years.

6.2

Compute the real GDP for each of the three years, taking 2006 as the base year.

6.3

How does the real GDP in 2006 compare to the nominal GDP in 2006 when 2006 is used
as the base year?

6.4

Based on your calculations, comment on the economic well-being of the above twogood economy. Have things improved over time for this country (in terms of real-GDP)?

7.

List the five macroeconomic objectives and describe what these objectives aim to achieve.

8.

Define the following concepts

9.

8.1

Gross Domestic Product

8.2

Quantile Ratio

8.3

Consumer Price Index

Draw a Lorenz curve and explain how the Gini Coefficient can be obtained making use of the
curve

Quiz will be discussed on your e-tutor site from Monday 10 March

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ECS 1601
Study Unit 5 Quiz
10.

Study the table below and answer the questions that follow:

Final Consumption expenditure by households

Net exports
Primary income payments to the rest of the world
Primary income payments from the rest of the world
Final consumption expenditure by government
Gross capital formation

2006 in
millions
17 432
39 456
20 489
18 563
79 489
14 569

2007 in
millions
18 382
37 325
19 598
18 456
80 258
17 598

10.1 Calculate GDE for 2006 and 2007

10.2 Calculate GDP for 2006 and 2007
10.3 Calculate GNI at factor cost for 2006 and 2007

Quiz will be discussed on your e-tutor site from Monday 10 March

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